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National Bank of Fujairah PJSC (NBF) Q1 2017 results show positive bounce back from last quarter of 2016

18 April 2017

Underpinned by strong liquidity and improvement in loan impairment provisions, NBF’s net profit grew 81.4% to AED 126.1 million from AED 69.5 million in Q4 2016

National Bank of Fujairah PJSC (NBF) is pleased to announce its results for the three month period ended 31 March 2017.

Highlights:

Loans and advances and Islamic financing receivables of AED 23.2 billion were up by 1.6% from AED 22.8 billion at 2016 year end, and up by 11.2% from 31 March 2016.

Customer deposits and Islamic customer deposits of AED 26.5 billion were up by 2.2% from AED 25.9 billion at 2016 year end, and up by 14.5% from 31 March 2016.

Shareholders’ equity of AED 4.6 billion remained at the 2016 year end level, while up by 6.3% from 31 March 2016.

Strong capital adequacy and liquidity levels were maintained, well ahead of Central Bank minimum requirements. Capital adequacy ratio was 17.5%, lending to stable resources ratio stood at 84.8% and eligible liquid assets ratio (ELAR) remains as one of the highest at the industry level at 24.0%. ELAR industry average stood at 16.2% for the year-end, based on regulatory statistics.

NBF posted a net profit of AED 126.1 million which is significantly higher than the AED 69.5 million reported in Q4 2016; a rise of 81.4% which reflects improvement in the impairment provisions during the current quarter. Compared to the corresponding period of 2016, net profit was lower by 16.2% after absorbing the ongoing elevated provisions.

Operating income was AED 324.6 million compared to AED 336.3 million in the corresponding period of 2016. Marginally lower operating income attributes to one-off exceptional income recorded in Q1 2016 and a significantly higher level of high quality liquid assets than the industry in general, which impacts interest margins. Foreign exchange and derivatives income recorded a 13.5% increase compared to the corresponding period of 2016.

Operating expenses decreased by 0.5%, reflecting NBF’s disciplined cost management. This improvement was achieved whilst we continued to make prudent investments in our businesses, systems and infrastructure, including a set of digital initiatives to enhance our offerings and customer service. Cost-to-income ratio stood at 34.7% compared to 33.7% in the corresponding period of 2016.

NBF continued with its prudent and transparent approach towards proactively recognising and providing for problem accounts. Net impairment charge was AED 85.9 million compared to AED 72.6 million in the corresponding period of 2016 and AED 162.3 million in Q4 2016. The NPL ratio was 5.11% compared to 4.95% as at 31 December 2016. Total provision coverage ratio was 92.1% compared to 101.3% as at 31 December 2016. Total provision coverage including collaterals improves to 103.9%.

Return on average assets was 1.4% and return on average equity was 11.0%.

NBF’s rating was re-affirmed at Baa1/Prime-2 for deposits and A3 for counterparty risk assessment by Moody’s, with a stable outlook, highlighting the bank’s underlying strength, prudent risk management and resilience.

H.E. Sir Easa Saleh Al Gurg, KCVO, CBE Deputy Chairman said:

“2017 proved as a good start for NBF, with the bank being honored with a number of prestigious awards and endorsements, underscoring NBF’s long-standing culture of service excellence and client partnership. We are particularly delighted that the bank has been awarded the Best Customer Service – Corporate and Investment Banking, Best Corporate Advisory Service – NBF Capital, Best Treasury Management, Best SME Internet Banking Service and Best SME Trade Finance Offering awards at the recent Banker ME UAE Awards.

NBF’s resilient financial performance in a difficult environment demonstrates its strong focus on being a reliable and consistent player and re-affirmation of our credit rating by Moody’s further underscores our commitment to long-term sustainability.

We are positive that the bank will continue to perform well in 2017 and will improve its results progressively as the impairment charges reduce to a normalised level through the course of the year.”

About National Bank of Fujairah PJSC:

Incorporated in 1982, National Bank of Fujairah PJSC (NBF) is a full services corporate bank with strong corporate and commercial banking, treasury and trade finance expertise as well as an expanding suite of personal banking options and Shari’a compliant services. Leveraging its deep banking experience and market insight within Fujairah and the UAE, NBF is well-positioned to build lasting relationships with its clients and help them achieve their business goals.

NBF’s key shareholders include the Government of Fujairah, Easa Saleh Al Gurg LLC and Investment Corporation of Dubai. Rated Baa1/Prime-2 for deposits and A3 for counterparty risk assessment by Moody’s and BBB+/A-2 by Standard & Poor’s, both with a stable outlook, the bank is listed on the Abu Dhabi Securities Exchange under the symbol “NBF”. It has a branch network of 15 across the UAE.